Disputes over small islands pose big conundrum for U.S

WASHINGTON (Reuters) - Far away from the United States and usually far down the list of things Washington worries about, the obscure islets at the center of bitter spats between China and its neighbors have become a flashpoint that could get hotter and embroil America.

This week served up fresh evidence that 2013 likely will bring no pause in tensions rippling the seas around China. Japan on Thursday scrambled fighter jets after a Chinese government plane entered what Japan considers its airspace over disputed islets in the East China Sea, just one of many contested sites.

Even as conflicts in the Middle East dominate the U.S. government’s foreign policy concerns, the State Department believes that the multilateral territorial dispute in the South China Sea is one of the most difficult issues globally.

But it has been relying largely on private diplomacy and broad statements of principle rather than public arm-twisting to try to head off potentially violent miscalculations over the disputes. Underscoring this concern is the so-called pivot of U.S. attention to Asia, which has involved more rhetoric and consultations than deployment of American military force.

However, hardly a week passes without incidents over fishing rights or oil exploration activities, and Washington’s approach, while it may have helped avoid outright conflict, does not appear to be dissuading an increasingly assertive China.

Recent moves by Beijing “in part mean China has not been deterred by the increased U.S. commitment,” said M. Taylor Fravel, a scholar at the MIT Security Studies Program.

China has taken de facto control of the Scarborough Shoal, a reef that falls inside the Philippines’ exclusive economic zone, and now frequently challenges Japan’s control of islands it calls the Senkakus.

Many analysts say intensifying Chinese pressure over the islands issue since 2010 helped fuel the election victory on Sunday of hawkish Japanese ex-premier Shinzo Abe. Abe’s campaign included calls for a tougher stance toward China.

The United States is officially neutral on the sovereignty issues and has urged diplomatic talks. It insists that all parties refrain from force and do nothing to impede sea lanes that carry $5 trillion in annual trade.

“These are among the most difficult issues on the global scene and we believe that we have played an appropriate role, oft times behind the scenes, to encourage calm and the maintenance of peace and stability,” said Assistant Secretary of State Kurt Campbell, the U.S. point man on the issue.

Some observers say they worry that Asian friends in Manila and Tokyo might not get the full-throated support they have had from Secretary of State Hillary Clinton and Campbell after those forceful figures in Asia diplomacy leave their posts next year.

Another lingering concern for 2013 is the deep U.S. defense cuts that could kick in if the “fiscal cliff” tax and spending debate fails to get sorted out. That could dent Asian allies’ confidence in American staying power or feed Chinese over-confidence.

NERVOUS STATES LOOK TO U.S.

Washington has longstanding security treaties with two of China’s adversaries in the dispute, Japan and the Philippines.

In the case of Japan, Washington explicitly has said the islands Tokyo administers and calls the Senkakus - and which China claims as the Diaoyu islands - would be covered by their 1951 security treaty in the event of attack.

The Philippines has not received such U.S. assurances over its disputed islets, but is getting American help improving its tiny navy in the face of increased Chinese pressure.

After talks this week in Manila, Filipino military chief General Jesse Dellosa said he expects the U.S. Navy to increase ship visits in his country next year. He said port calls and emergency repair stops at the former Subic Bay U.S. Naval base increased 30 percent in 2012 compared to last year.

China is locked in increasingly angry disputes with the Philippines and Vietnam over islets in the South China Sea whose surrounding waters hold important fishing grounds and oil and gas reserves.

Former U.S. foe Vietnam has also stepped up military contacts with Washington.

“Lots of states are nervous and they turn to the United States when they’re nervous,” Fravel said.

Compounding neighbors’ alarm at the assertive Chinese stance on territorial disputes - which also flared up briefly in the 1970s, 1980s and 1990s - is a recent period of China flexing increasing military might, including the launch of its first aircraft carrier and the test flights of stealth jet fighters.

China often blames the U.S. Asia pivot for goading smaller countries to join an anti-China “containment strategy” - a view many analysts say is wide of the mark, given vast U.S.-China bilateral trade, investment and exchanges.

But Manila has been warned by experts and former U.S. officials visiting the region - most recently former Pentagon number three official Michèle Flournoy last month in Australia - not to mistake American engagement as a green light to take steps in the disputed waters that provoke China.

Actual U.S. troop and military hardware movements under the pivot have been small so far, with region-wide force levels stable at some 80,000 troops, mostly in Japan and South Korea.

The longer-term dilemma for the United States is avoiding conflict with China while protecting the integrity of the global system in the face of Chinese “salami tactics of taking little slices when it can,” says James Holmes, a specialist on maritime strategy at the U.S. Naval War College in Rhode Island.

“It doesn’t really make much difference to us who owns the Senkakus, let alone the Scarborough Shoal,” he said, adding that fighting China over those rocks would be politically difficult to sell to a war-weary U.S. public.

But if China “wants to compel others to agree to the principle that it can unilaterally modify the system, it can pick something that nobody else has a real stake in defending, then it can come back and pick something bigger and more ambitious.”

NATIONALISTIC DYNAMICS

Admiral Samuel Locklear III, Commander of the U.S. Pacific Command told reporters last week it was important to “ensure that all parties remain calm about these things and that we don’t unnecessarily introduce war fighting apparatus into these decisions or into these discussions.”

But many U.S. analysts worry about the dynamics of disputes with several parties all facing nationalistic pressure to respond to perceived challenges. Amid increased naval activities, poor communications could lead to accidents at sea.

“The fundamental tragedy of territorial disputes is that each country believes its actions are purely defensive and just protecting their claims and that the actions of opponents are offensive,” said Fravel.

Additional reporting by David Alexander in Washington and Manuel Mogato in Manila; Editing by Jackie Frank